Learn about useful money management techniques in English to minimize losses and to make investments wisely for better trading experience.
1 - Invest only what you can afford to risk
For any kind of trading investment do not use funds that you cannot take a risk with ( such as money taken via a loan, day to day expenses etc.. ) as all kinds of trading investments do carry higher level of risk than other usual investments
2- Avoid Economic News Time
The price fluctuate very fast during economic news times. So avoid trading 15 minutes before and after news ( You can trade based on news but not recommended for any new comers unless you are aware of the economic news possible result ).
3 - Choose currency pairs that give you 80% and above for successful predications
Choose only currency pairs that give you 80% and above yield. Because then you need only to be successful with 6/10 ( 60% ) of trades per day to be profitable.
4 - Use only 5% of your total investment per trade
Do not invest more than 5% of the total capital. If you invest more than that, you will most likely not be able to execute more trades incase if first few trades goes against you. So you can refer below details to get an idea based on your capital
if your balance is $200 : $10 per trade
if your balance is $250 : $12.5 per trade
if your balance is $300 : $15 per trade
if your balance is $400 : $20 per trade
if your balance is $500: $25 per trade
Once you are successful with trading, you may increase it upto 10% but not anything more that that. Also do not invest more than $50 per trade even if you have a very high capital.
5 - Do not enter multiple trades at the same time interval
Do not enter many trades during same time ( If you are successful with trading or follows a Binary Options Signal Service , then you can enter several trades otherwsaie enter only one trade at a time )
6 - Do not place multiple amounts in same trade
Once you enter a trade, do not put more money in to that same trade as the other amounts that you add later on may go against you and results in more losses.
7 - Use Trading Journal
In an excel sheet or a book write all details that you used to analyse and enter the trade. This way you can improve your success rate by evaluating the trades end result.
8 - Study the outcome of each trade
If a trade is successful or even unsuccessful, make sure to go through it to make further improvements that will benefit future trades.
9 - Do only a fixed number of trades per day
Generally do only about 10 trades per day at maximum ( Once you are a successful trader, you may increase the volume )
10 - If you lose 2 trade continuously, stop trading for several hours
In case if you loose 2 trades continuously, take a couple of hours break and start trading again but if you loose 4 - 5 trades continuously ( If this happens occasionally, you can stop the trading for that particular day and start trading from next day onwards ), read this article again and again. Switch back to demo account and practice. Also you may consider a signal service.
11 - During trading time, avoid any other work
Don't get involved with other work when trading as 100% focus is needed to be successful with trading or even any other kind of investment.
12 - Patience and Practice ( no point in doing trading without these two things ! )
Patience and Practice are two of the most important things for any kind of job or investment. Some do not consider these two aspects much and these are most likely reasons for limited success or failure. Practice helps to improve your trading method and also correct any mistakes in trading. Patience is one of the key things. Say you make profits with several trades and you start placing more trades without proper analaysis, what will be the end result ? Unwanted losses right ? So trade with patience mate for higher success rate ! Always place a trade only if it tally's with your analysis & predetermine set of rules. One trader may become success in a week while another may need several years, So patience and practice are main things for your success ! Good Luck !
( For Sinhala version of this article, please refer : Money management techniques for binary options in Sinhala )
RISK WARNING: YOUR CAPITAL MIGHT BE AT RISK.
General Risk Warning: The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose